Microsoft CEO Steve Ballmer: Bing!

“Search and advertising, we are a small share….It’s all about Google. They have share, we don’t have share.” Microsoft CEO Steve Ballmer said that back in February, and according to the latest metrics from comScore (SCOR), it’s as true today as it was then. Google (GOOG) grew its share of the search market once again in April, and once again, Microsoft (MSFT) did not. The search sovereign’s share rose to 64.2 percent in April from 63.7 percent in March and 61.6 percent from a year ago, according to new data from comScore. Its April query volume grew 45.5 percent, the fastest growth rate since October 2007. Meanwhile, Microsoft’s market share for the month topped out at 8.2 percent, down from 8.3 percent in March and 9.1 percent a year ago.

Live Blog

After another song from Jill Sobule and some introductory remarks, Walt welcomes Steve Ballmer to the stage. He’s drinking a massive iced-coffee, as if he really needs the caffeine …

Walt kicks things off with a question about the souring economy. Ballmer’s opinion of it is apparently more sober than most. Ballmer says this is a “different recession. A recession implies that you sort of go down and go up. In this case, I think this is money that’s just got to come out of the economy….We’re really resetting the economy. Maybe we should think of today as normal and yesterday as the bluebird.” So how long will this continue, asks Walt. Ballmer says to think things will return to the good old days quickly is naive….“Is this a 50-year phenomenon? I don’t think so. But it’s not going to be over in three months, either.”

So how does this affect your business? Ballmer says Microsoft (MSFT) is doing a lot of soul-searching and flattening out its business and cost base. “We’re shaking up the future product investment stream.” That said, he notes that the company continues to invest aggressively in R&D. “We’re investing in areas where there’s room for improvement.” Interesting euphemism.

Referring to poll data, Walt notes Microsoft’s paltry share of the search market. “There’s a lot of distance between you and Google,” he says. “Is search the most important thing to you as CEO or are you more concerned with Windows, etc.?” “Our foremost concern is great people,” says Ballmer. “I spend more of my time on talent than trying to be ‘the search guy.'” He refers to Microsoft’s “seven big things.” What are they? “I’ve got seven children, I love,” says Ballmer, referring to Microsoft’s various businesses. “Look, we’re obviously where we are in search and we want to do better….We’re hoping to be one of the companies that moves the industry forward….The PC business continues to be big, we’re going through an economic reset, but there’s still vibrance there.”

Ha. Walt convinces Ballmer to refer to Google (GOOG) as Google, rather than “the market leader” as he has in years past. “Goo… Google,” he says.

Walt refers to another slide about search–how consumers choose search. He notes that most choose search out of habit and because of the brand. Given that, how can Microsoft compete? We’re about to find out apparently. But first a video…

It’s a “Star Trek” parody– “Search: the final frontier. To boldly go where someone had gone before.” “A bold search for a new name.” Video runs over Microsoft’s chronic renaming of its search engine.

And there it is: the new name is “Bing.”

Referring to Apple (AAPL) CEO Steve Jobs, Ballmer jokes that the name might have been Boom–“We should have named it ‘BOOM!'”

Why Bing? Obviously we needed a better name, says Ballmer. “We needed a name that says this is all about search.” Ballmer doesn’t seem to really know. “I’m not the creative guy, here…short mattered…people like to ‘verb up’…works globally, doesn’t have negative connotations.” Walt: So everyone is going to walk out of here and say “Bing me”? Clearly that’s Ballmer’s hope. “This is a very important step…it’s not a substitute for innovation, but we need to build brand equity in addition to technology equity.”

Was securing the trademark problematic? Ballmer says there were a few challenges. Bing Crosby, apparently, was not an issue. In any case, Ballmer seems to enjoy saying the word of his new search service. Maybe Microsoft should consider a new name for Zune. “Zing”?

Ballmer brings out Yusuf Mehdi to demo Bing. It’s going live on June 3. From a UI perspective, it’s a box and a button format with screensaver-esque background. Demoing basic Web searches. Best Match denotes an official or definitive site–the site we know to be authoritative. Instant Answer–answers to obvious questions delivered along with search returns; a search for Oscars immediately returns a result for who won an Academy Award. A search for UPS (UPS) automatically returns a customer service number at the top of the page. Walt asks to search on “Microsoft.” Much laughter, but the search return does feature a customer service number.

Bing also returns real-time flight data. Handy. Mehdi notes that Bing includes the technology Microsoft acquired when it purchased Powerset. Using it to “understand” pages, mine data. Walt notes that returns from Encarta, Microsoft’s now-defunct encyclopedia, appear along with material from Wikipedia. “Encarta? What’s that?” he jokes. Ballmer chuckles: “Encarta is an encyclopedia…that is not getting much ongoing investment.”

Demoing media searches now. Video searches pull up a nice screen of thumbnails that play in the search pane when clicked. On to weather. Bing gives a full five-day forecast, as opposed to what Google offers–a single day, I think. Search for a city returns, weather, events, sports games, video mentions of the area.

On to shopping. A search for a Canon (CAJ) camera returns a hybrid search shopping page. Price comparisons, user reviews. Also, Cashback, which rewards people for purchases made through the site. Here’s a nice feature: Farecast. Flight search–issues a query across airlines by price, hops, etc. Also tracks flight pricing trends. Tells you if your fare is likely to go up.

Bing seems to be designed specifically to keep people on its search pages as opposed to sending them off to other sites. Is that what Microsoft is trying to do? Won’t this annoy content owners? Ballmer says no and adds that content deals are possible. “We’re not trying to get in the way of copyright holders,” he says. “If value should be redivided somehow between content providers, advertisers and search engines, let’s have that conversation….We’re not trying to profit off of anyone else’s work.”

Recalling Ask’s big redesign and it’s subsequent rise and fall, Walt asks if the same thing might happen to Bing. “No,” says Ballmer. Bing is too tremendous a stride. It differentiates itself from Google. It might not appeal to everyone, but if it appeals to 20 percent of them, that’s a success. Ask wasn’t able to do that.

Ballmer: “Search has not been a dynamic category in terms of innovation.”

Not at Microsoft, anyway …

Walt circles back and notes that Ask spent an enormous amount of money on a rebranding campaign that ultimately failed despite some good buzz. How much money is Microsoft dedicating to the Bing branding campaign? “Lots,” says Ballmer. “When I approved the budget, I gulped, and a gulp in a $60 billion company, well, that’s a big gulp.”

Walt asks Ballmer about the overhaul of Windows and how important it is in an era when we’re moving to cloud-based services and from PCs to netbooks and mobile devices. Ballmer seems puzzled by the question. Smartphones are PCs. Netbooks are PCS. “The Web is designed for the PC….Most of these mobile apps are substituting for the fact that the original app wasn’t designed for the PC,” he says.

Walt refers to some survey data again. Notes that many consumers say they don’t plan to purchase a netbook in the near future. How do you interpret that? Ballmer: “I just think netbook is a funny brand….What is a netbook? Is it defined by its operating system, its memory, its screen size? They’re really just PCs. I bet if you asked people if they planned to buy a portable computer you’d get a much better response….It’s a little hard to know what the heck the difference is between the netbook and the PC.”

Walt: Windows 7 is on track? Ballmer: “I’m not sure what ‘track’ it is, but whatever it is, it’s on it.”

On to the Q&A. First question: How is Microsoft going to convince users to learn the new Windows 7 and Office UI? Ballmer says change is difficult. Notes that he hates whenever The Wall Street Journal changes its format. He says Microsoft’s internal testing has determined that the changes the company has made to the OS and Office suite are good ones that will be embraced. That said, there will always be some difficulties.

Questioner asks about natural-language search, wondering how Bing would deal with a search for a Hilton hotel in Paris, when there’s the possibility that it might return a list of results for Paris Hilton. He asks for a demo, but Ballmer declines. He can try it for himself on June 3.

Question about Microsoft’s efforts in the medical arena. Ballmer: “Health’s a tough business. People who make IT decisions in the medical industry don’t make them quickly.” That said, Microsoft is “full speed ahead” in the area.

How is Microsoft differentiating sponsored searches in Bing? Cashback is obviously differentiated, Ballmer says. Paid side is tougher though.

Final question from Walt: Does Bing mean that your interest in Yahoo (YHOO) is waning? Ballmer jokingly recites the standard bullet points. “I think there’s a lot that can make sense in terms of a search partnership, not an acquisition,” he says in a monotone. “Whether such a thing will happen I don’t know.” Walt presses him further about a meeting between Ballmer and Yahoo CEO Carol Bartz. Ballmer jokes that the meeting was actually a note that Bartz left for him in the Green Room. According to Ballmer, it read: “The makeup couldn’t fix me if it tried.”

Quick update: we managed to get our hands on the actual note: It was left next to the makeup in the Green Room and reads:

Steve,

Forget it

Won’t help

Ha

Carol

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

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